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Little progress on job creation goals for Dayton or GOP

Gov. Mark Dayton and Republican legislative leaders began the 2011 session with a common priority of helping Minnesota employers create new jobs.

But two months later, neither of their competing strategies has made much headway. Dayton remains focused on a bonding bill, while GOP legislators are considering a host of tax breaks for businesses.

Republican leaders in the House and Senate declared in early January that their top priority for the session was to make Minnesota more business friendly. They said a combination of regulatory relief and tax reductions would help grow private sector jobs.

State Sen. Geoff Michel, R-Edina, the chief author of a bill that would cut Minnesota's corporate tax rate by half over six years and roll back business property taxes to 2009 levels, said the state needs to attract employers willing to take risks and invest capital a reason.

"We need to send a strong message to Minnesota job creators, to job creators in other states and even in other countries, that this is a place to come do business," Michel said. "Companies are right on the edge, I think this economy is coming around. So, we need to give them a reason to come here. We need to give them a reason to choose Minnesota."

The bill just cleared its first committee this week, but Michel insisted it's still on schedule. He said the $200 million cost of the tax breaks will be paid for as part of a larger budget plan to erase a $5 billion deficit.

"This will be part of a balanced budget that we'll put together over the next -- we've got about a month," he said.

Michel is confident that the tax breaks will result in jobs, but not confident enough to say how many or how soon.

Democrats aren't convinced. State Sen. David Tomassoni, DFL-Chisholm, said the GOP legislation only guarantees tax breaks, even to corporations based in other states. He said there's no guarantee of jobs.

"It's a hope and prayer bill," Tomassoni said. "We don't know exactly what's going happen because when corporations get cash that they don't expect, often times they just give it back to their shareholders. So, who knows if this is going to result in more jobs or not."

Tomassoni said he favors passing a bonding bill, which he claims would put people to work immediately. Dayton made it clear this week that his bonding proposal is still a high priority.

"So that bonding bill of $1 billion that I'm proposing would generate up to 28,000 new jobs in the private sector construction industry," Dayton said. "It is in my view vital to putting people back to work throughout Minnesota, particularly in the building trades, where unemployment is very unacceptably high throughout our state."

Republicans remain cool to Dayton's bonding proposal, even though the governor invited them to suggest about half of the projects. They also don't like his proposed income tax increase on top earners, which the GOP argues would hurt small business owners.

Dayton and GOP leaders largely agree on a jobs-related measure that would streamline environmental permits for businesses. The governor appears poised to sign the bill this week. House Majority Leader Matt Dean of Dellwood said the bill will give hope to the unemployed.

"Two hundred thousand," Dean said. "That's the number of Minnesotans who are out of work currently. We need to do something about that."

Republicans are also looking at dozens of other proposals to help businesses, including tax credits for job creation and sales tax exemptions for companies that buy new equipment. State Rep. Greg Davids, R-Preston, chair of the House Taxes Committee, is proposing a complete phase out of the corporate income tax.

"I'm actually getting some support from some folks that I didn't believe I'd get support from, in that they realize how regressive the corporate income tax is," Davids said. "The higher the corporate income tax you have, that means less money for union workers, for employees. They're going to pass the costs on to the consumers, and it hits the consumers with the lowest income hardest because they have the least money to spend."

But those tax breaks could add to the state's deficit. Davids' tax bill, along with the GOP budget plan, will be ready by the end of the month.